Prime Minister John Key has hit back at Labour over new Reserve Bank mortgage lending limits, saying home buyers are better off under National due to lower interest rates and no capital gains tax.

Labour continued its attack on the new mortgage lending restrictions coming into force tomorrow by inviting media to meet an aspiring first home buyer the party said would be affected.

The Reserve Bank restrictions will limit the number of home loans banks can make on purchases with a loan-to-value ratio greater than 80 per cent, meaning most would-be home buyers will need a 20 per cent deposit.

Mr Mongia, who said he wasn't a Labour Party member and had no affiliation to the party, said it was "quite tough" to find a property in his price range and the new restrictions would make it even harder.

"I think a lot of people like myself might be stranded out of the market.

I think it doesn't help the situation in any way. I think something needs to be done, it's just a matter of what.

"I'm not alone, I think there's a lot of people in this situation."

Mr Mongia, an IT consultant was looking at properties in the $400,000 to $500,000 range in south Auckland or Mt Wellington.

"If it's good enough I could live in it, otherwise it could be an investment property."

Mr Mongia said he has been looking for four or five months and has enough saved for a 10 per cent deposit.

But Mr Key this afternoon told reporters he had seen Mr Cunliffe "parading around" with first home buyers, but Mr Mongia should bear in mind that interest rates were currently very low which would make a big difference in what he paid for a house.

"Under National they're paying $20,000 a year less in interest on their mortgage than they otherwise would have done under Labour."

He also pointed out Mr Mongia had suggested he may buy a home as an investment property.

"Well I hate to tell them but the person they're standing next to - David Cunliffe - is wanting to put a capital gains tax on that very property they were talking about buying."

Mr Cunliffe, meanwhile, said the new restrictions would lock "hard-working young people like Kanik out of the market - that's wrong".

"They could easily have a loan-to-value ratio that exempted first-home buyers, or if it's the Auckland market that's the problem, what's wrong with targeting the Auckland region [only]?

"What's the point in putting a move like this on Palmerston North where house prices have been flat, or other regions down south where they've actually been falling? It makes no sense at all."

The Government were "taking a sledgehammer to crack a nut" and "using a one-size-fits-all" policy, Mr Cunliffe said.

Labour's KiwiBuild policy - building 10,000 modern, affordable homes annually for a decade, a capital gains tax limiting the profits on property speculation, and smarter engagement between the Finance Minister and the Reserve Bank - were other possible solutions to Auckland's housing crisis, Mr Cunliffe said.

Speaking on Newstalk ZB this morning, Mr Key acknowledged the changes meant people would have to save longer to get into a home.

"But the other side of the coin is if house prices keep going up in Auckland by double digits every year that leaves those first home buyers very exposed because at some point that bubble would burst and they would have borrowed an enormous amount of money against a property that's no longer worth that. It's very risky."

Mr Key also said it would be wrong for the Government to interfere with the Reserve Bank.

"Overall, we'll need to let this thing run. The Reserve Bank has the independence to do that and the Government shouldn't interfere on that front. But I'm confident over time the market will actually settle down and hopefully what that will mean for these first home buyers is they'll be getting better value for money when they buy their home."